Simulations Plus Gears Up for Q2 Earnings: What's in the Offing?

Simulations Plus, Inc SLP is slated to release second-quarter fiscal 2025  after the closing bell on April 3, 2025.

Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

The Zacks Consensus Estimate for fiscal second-quarter revenues is pegged at $21.76 million, which indicates growth of 18.8% from the year-ago quarter’s reported figure.

The consensus mark for earnings is pegged at 25 cents per share, indicating a 25% increase from the prior-year level. The company’s earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters while missing in one, with the average earnings surprise being 18.6%.

The company reported adjusted earnings (excluding the impact of acquisition costs) of 17 cents per share, which declined 5.5% year over year in the last reported quarter. The figure also missed the Zacks Consensus Estimate of 18 cents per share. Revenues jumped 31% year over year to $18.9 million due to higher software revenues in the Clinical Pharmacology & Pharmacometrics (CPP), Cheminformatics business units and the Quantitative Systems Pharmacology (QSP) unit.

Factors at Play

Steady momentum in the software business unit driven by the widespread adoption of GastroPlus, MonolixSuite and ADMet Predictor is likely to have cushioned Simulations Plus’ performance in the fiscal second quarter.

Synergies from acquisition act as a key catalyst for the company’s prospects. The Adaptive Learning & Insights (ALI) and Medical Communications (MC) divisions, which were obtained through the acquisition of Pro-ficiency in June 2024, generated $3.7 million in revenues during the first fiscal quarter. SLP remains on track to combine both business units, unlocking growth opportunities with enhanced product and service offerings.

With global health challenges surging, SLP is working relentlessly to provide solutions that enhance life-saving treatments and improve patient outcomes. During the quarter under discussion, it supported the development of a majority of the drugs approved by the U.S. Food and Drug Administration (“FDA”) in 2024. The company continues to expand the business pipeline activities for its flagship GastroPlus platform. It has partnered with the Enabling Technologies Consortium (“ETC”) to improve IVIVC methods for oral drug delivery and enhance the cutting-edge platform.

While services revenues increased 19% in first-quarter fiscal 2025, the segment faced temporary challenges due to client-driven data delays that postponed the initiation of certain projects. However, bookings were particularly strong in the CPP and MC business units, suggesting potential revenue realization in the to-be-reported quarter.

Simulations Plus, Inc. Price and EPS Surprise

Simulations Plus, Inc. price-eps-surprise | Simulations Plus, Inc. Quote

The Zacks Consensus Estimate for Software and Services revenues in the fiscal second quarter is pegged at $12.78 million and $9.03 million, respectively. 

Nonetheless, soft client funding and budget cycles, especially for biotech and pharmaceutical customers, remain concerning amid an uncertain macroeconomic environment. Despite these challenges, Simulations Plus remains optimistic on initial budget discussions with clients for the calendar year 2025, indicating potential improvements in client spending.

What Our Model Says About SLP

Our proven model does not conclusively predict an earnings beat for SLP this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That’s not the case here.

Simulations Plus has an Earnings ESP of 0.00% and a Zacks Rank #4 (Sell). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks With Favorable Combination

Here are a few stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season.

RH RH currently has an Earnings ESP of +0.94% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

RH is scheduled to report quarterly earnings on April 2. The Zacks Consensus Estimate for RH’s to-be-reported quarter’s earnings and revenues is pegged at $1.91 per share and $827 million, respectively. Shares of RH have declined 24.5% in the past year.

Franklin Covey FC has an Earnings ESP of +20.59% and a Zacks Rank #3 at present. FC is scheduled to report quarterly figures on April 2. The Zacks Consensus Estimate for FC’s to-be-reported quarter’s earnings and revenues is pegged at a loss of 11 cents per share and $62.7 million, respectively. Shares of FC have declined 25.8% in the past year.

JPMorgan Chase & Co. JPM has an Earnings ESP of +1.19% and a Zacks Rank #3 at present. JPM is set to report quarterly results on April 11. The Zacks Consensus Estimate for JPM’s to-be-reported quarter’s earnings and revenues is pegged at $4.57 per share and $42.9 billion, respectively. JPM shares have gained 23.4% in the trailing 12 months. 

 

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This article originally published on Zacks Investment Research (zacks.com).

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